DESPAIR

The markets opened with a gap down on the back of lower than expected revenue guidance from Infosys, which raised concerns over the outlook for the software services exporting sector.  The markets continued to trade with a strong negative bias throughout the entire trading session and ultimately both the indices closed near their lowest point of the day, marking the biggest single day fall, since late February. The Nifty and the Sensex closed down by 65 and 299 points down respectively. The market breadth was extremely negative with 550 advances to 798 declines. On the sectoral front, obviously the IT sector was the biggest loser, while the FMCG sector was the biggest gainer followed by the Banking sector. On the individual stocks front, JP Associates, Ambuja Cement, ITC, Asian Paint & BPCL were the top five Nifty gainers, while Infosys, Coal India, HCL Tech, TCS & L&T were the top five Nifty losers for the day. On the Institutional side, both FIIs and DIIs were net sellers to the tune of 28 & 312 crores in the cash market.

On the derivatives side, FIIs were net sellers in both Index futures and Options to the tune of 402 & 451 crores respectively, while they were net sellers in Stock futures to the tune of 39 crores and net buyers in stock options to the tune of 32 crores. Nifty future settled at 5535, with just 7 points premium to the spot, along with a marginal increase in open interest. On the options side, PCR stood at 1.02, along with a fall in the India VIX by 3.06%. On the Call options side, the 5600 call added the maximum open interest, followed by the 5500, 5700 & 5800 calls, while the 5900 call lost the maximum open interest, followed by the 6000 call. On the Put options side, the 5600 put lost the maximum open interest, followed by the 5500, 5400 & 5700 puts. The entire activity in the F&O space indicates further shorting in Index futures and Call options, while in the Put options space, there was liquidation of long positions.

On the technical side, after a brief relief Nifty once again resumed its downward journey,which once again highlights the complete risk aversion among the market participants. The only support now seems to be the 5453 level, beyond which there will be a free fall. The levels to watch out for Nifty, will be 5549, 5571 on the upside and 5500, 5473, 5453 on the downside. On the currency front, the Rupee ended flat on Friday, as slump in local stocks was evened out by hopes the central bank would cut interest rates next month after data showed slowing consumer inflation. The partially convertible Rupee finally closed at 54.52, while the near month USD-INR future settled at 54.68 for the week.

On the international markets front, the Asian markets closed on a mixed note, while the European markets have closed deep in the red and the U.S. markets have ended almost flat. On the Energy futures front, both the Brent and WTI crude oil futures have closed down by 1.11 & 2.37% at 103.11 & 91.29 $/bbl, while the Natural Gas future closed up by 2.01% at 4.22 $/MMbtu.